Gabe Newell's wide-ranging keynote at the DICE Summit this morning didn't include any big announcements. But Newell did provide some tantalizing hints about how Valve is thinking about advancing the PC gaming market in a number of different ways in the future.

One of the major themes centered on the living room TV as the next major frontier for the PC. Not only will this allow gamers to take advantage of the more open and innovative gaming environment of the PC in a new locale, but it will give people access to apps they've invested in (such as Hulu, Twitter, iTunes, and Facebook) without having to worry, "Oh my god, how are we going to get that application running on our TV."

Newell said he sees the PC-in-the-living-room market segmenting into three general tiers of "good/better/best" pricing and functionality. At the low end, the "good" configurations will just treat the TV as an extra monitor for your existing PC, which may be somewhere else in the house. As things like Project Shield and Miracast have shown, the technology is there to do this using local networks at a very low price point. The tricky part, Newell said, is to make the user experience seamless. There should be no need to worry about pairing devices, configuration, audio syncing, and input latency issues.

While local home streaming is entirely feasible, Newell made it clear that he doesn't think OnLive-style centralized streaming of content over the wider Internet will ever really work. Distributing functionality over a network is one of the oldest problems in computer science, he pointed out, and having smart nodes at the ends of the network has turned out to be the best solution. "Cloud gaming works until it starts to be successful, when it falls over from its own success," he said. Furthermore, future gaming applications are only going to be more sensitive to the latency inherent in Internet streaming.

On the "better" tier will be standard PCS in a console factor and price point. There's nothing magical about console hardware, Newell said. The PC has been evolving so quickly that gamers and developers should be able to take advantage of the massive expenditures on hardware without worrying about throwing it all out every five or six years when the console "upgrade" cycle comes along. Newell reiterated that he's less worried about how console makers will respond to this and more worried about Apple, which already has a much less "lumpy" upgrade cycle through its iOS devices.

For Newell, the high end "best" tier of devices will take advantage of the scalability that PCs have always excelled in. Adding things like more 3D performance, storage, or a faster connection will be just as easy on many living room PCs as it is on standard office desktops. Newell envisions many vendors offering "sky is the limit" $4,000 living room PCs. Valve's job is to make sure the experience on those devices is as good as possible.

Newell views his three tiers as complementary, not competitive with each other. It won't take much for someone on the low end to upgrade to a high-end machine that is better than the fastest console, all without having to give up their existing library of games or peripherals.

But the biggest problem stopping living room PC gaming from being a reality according to Newell is controls. Valve is thinking quite a bit about the input side of games, particularly how to best unify a world currently segmented into keyboard/mouse, motion controls, touch controls, and traditional gamepads. "We don't want to sell a bunch of [controller] hardware," he said. "We want to move things forward. We'll sell hardware if we have to, but the big thing is to think through these issues."

"We can't compete with our customers"

Newell's second point of emphasis concerned user-generated content. Newell said user-generated content may have revolutionized the game industry, but developers still have to change the way they think about encouraging and monetizing this content.

"We can't compete with our own customers," Newell said. "Our customers have defeated us, not by a little but by a lot." This isn't just about putting cute antlers on an in-game dog but about players building content as good or better than pro developers at an incredible rate. Valve has seen liquidity issues in its games as players hoard items that are de facto currencies, and the company had to deal with trade balance issues as goods travel from one game to another.

Valve now thinks of its games as part of a huge economy, essentially productivity platforms for goods and services. One thing that's still needed, however, is for these markets to be persistent. That way, you don't have to effectively burn down the house you've built in one game when you move on to another. Borrowing some MMO terminology, Newell said he sees all games essentially becoming "instanced dungeons" of one central economy. "All games should maximize the ability to transfer goods and services," he said. "If Dota2 can't trade with Skyrim, that's a global failure."

This process has already started with the Steam Workshop, where some content makers raise more than $500,000 a year selling in-game items they make across games. But Newell wants to extend the idea of what counts as an in-game good even further. If a well-known pro gamer can digitally "sign" an item to increase its value, that should be something a player should be able to monetize. If a player can create a "quest" to go kill his brother in a game 20 times, he should be able to offer money for that in the marketplace. Tool developers should see their software as free-to-play games, monetized through a share of the proceeds their users earn when selling items made using those tools.

The idea of user-generated content should even extend to the idea of the Steam storefront itself, Newell said. He teased the idea that individual players would be able to build on the Steam experience with their own stores that sit on the front end, selling their own curated collections of content. Any community or "editorial perspective" will be able to take their experiences and present them to their audience through that storefront, he said.

Furthermore, Newell hoped Valve could get out of the business of curating the Steam storefront in the first place, removing the approval process bottleneck to get on the storefront. Someone will still have to worry about issues like viruses and protecting copyrights, but Valve is currently thinking of ways to eliminate the barrier between content creators and those who want access to the game. "Customers should have distribution frameworks, but the idea of someone acting as 'global gatekeeper' is a pre-Internet way of thinking."

To me the ideas might approach / converge into a new "cyber world" or a "metaverse" where people hang out and congregate in games as if they were lounges, in stores, and such. Almost like a Second Life, but where users and players have more incentive to hang around, but in a more abstracted sense, without the virtual avatar. Very cool.

Nice to see Valve's paying attention to the already strong market for TF2 items, and thinking about ways to extend it to other games. You can, of course, sell many TF2 items to other players in the Market, but that cash can only be used to buy other things on Steam - games and more TF2 items (and Dota 2 invites for $0.02).

I like a lot of Valve's idea's. There's always negative things we can focus on, but I can say when taking in the entire body of work of Valve and Steam, I've been very happy with their direction and progress. They really brought community-based gaming back into the picture, both for their profit and our enjoyment.

This also sounds fun, a virtual bounty board:

"If a player can create a "quest" to go kill his brother in a game 20 times, he should be able to offer money for that in the marketplace."

I'm not sure I like the idea of inter-game marketplaces. I generally prefer my games to be stand-alone (unless part of a series).

I can see this becoming something like requiring you to play one game to unlock an item in another, and I don't want to see that happen. (Though there are small cases of it already in some instances).

Well it already exists for TF2 and Spiral Knights and maybe some other stuff. It can be kinda neat if you build up free loot you don't want in one F2P game, you can swap it for stuff you do want in another without forking over more cash or using up in-game resources you want to keep.

You can currently sell invites to Dota 2, as well as TF2 items, for straight cash that can be used to buy games. There are also some obvious interface cues (as well as the big ol' "BETA" at the top) that indicate that you will be able to sell your games at some point - sooner rather than later, as European governments are forcing Valve's hand on the issue.

Controls are a big issue, but the interface on the other end is important, too. The biggest issue I have with my plain jane living room PC is seeing my moderately sized 32" TV from 25' feet away to double click the next video file with my mini bluetooth keyboard/mouse. Standard Windows 7 even with the accessibility features doesn't play well at that scale. Ironically, an operating system scaled to a phone or tablet would work better. Windows Media Center was a step in the right direction and I've seen some decent proprietary TV interfaces.

Windows 8 may or may not be useful here -- I think it fails as a basic desktop PC but might have potential in this space with the right controller device. My TV isn't touch screen and I don't want to have to walk all the way over to navigate anyway.

This process has already started with the Steam Workshop, where some content makers raise more than $500,000 a year selling in-game items they make across games.

I noticed Valve is saying this on the very day that CS:GO got an update that allows users to post maps on the Steam Workshop... and servers to download maps and entire mapgroups (and have CLIENTS download said maps) directly from the Steam Workshop.

As it turns out, new Steam features are now being guinea pigged in CS:GO instead of TF2... first the new Protobuf UserMessages, and now connecting directly to the Steam Workshop for maps.

Controls are a big issue, but the interface on the other end is important, too. The biggest issue I have with my plain jane living room PC is seeing my moderately sized 32" TV from 25' feet away to double click the next video file with my mini bluetooth keyboard/mouse. Standard Windows 7 even with the accessibility features doesn't play well at that scale. Ironically, an operating system scaled to a phone or tablet would work better. Windows Media Center was a step in the right direction and I've seen some decent proprietary TV interfaces.

Windows 8 may or may not be useful here -- I think it fails as a basic desktop PC but might have potential in this space with the right controller device. My TV isn't touch screen and I don't want to have to walk all the way over to navigate anyway.

If they integrate more of these features into Big Picture mode, Valve has some serious possibilities here.

'Newell said he sees all games essentially becoming "instanced dungeons" of one central economy. "All games should maximize the ability to transfer goods and services," he said. "If Dota2 can't trade with Skyrim, that's a global failure."'

This is kind of like the Euro. Seems like a good idea, but one tanking national economy and everything can get screwed up. Plus, unlike national economies, there is no real incentive to play nice. Losing users? Increase the frequency of higher value items that can be transferred to other games. You'll get massive inflation.

The current system actually works better. To some extent you can transfer wealth from one game to another. First you sell your goods in game 1 for real world cash. Then you use real world cash to buy goods in game 2. This seems awkward, but what it means is that inflation is inherently limited. And a game can't prop up its value with inflation, that will just devalue its goods -- plus the shrinking user base will also reduce the value of those goods. Games still have to compete on what's important, game play.

Does he foresee far enough in the future to tell us anything about Episode 3?

Naah !But he and others are salivating at the Jaws thinking of the near Future when no one owns any Art or Games but "Rents & DRM" it and throughout your viewing and gaming experience you also get to see many different In-Art Advertisements.

To me the ideas might approach / converge into a new "cyber world" or a "metaverse" where people hang out and congregate in games as if they were lounges, in stores, and such. Almost like a Second Life, but where users and players have more incentive to hang around, but in a more abstracted sense, without the virtual avatar. Very cool.

Does he foresee far enough in the future to tell us anything about Episode 3?

Naah !But he and others are salivating at the Jaws thinking of the near Future when no one owns any Art or Games but "Rents & DRM" it and throughout your viewing and gaming experience you also get to see many different In-Art Advertisements.

I'm not sure I like the idea of inter-game marketplaces. I generally prefer my games to be stand-alone (unless part of a series).

I can see this becoming something like requiring you to play one game to unlock an item in another, and I don't want to see that happen. (Though there are small cases of it already in some instances).

Well it already exists for TF2 and Spiral Knights and maybe some other stuff. It can be kinda neat if you build up free loot you don't want in one F2P game, you can swap it for stuff you do want in another without forking over more cash or using up in-game resources you want to keep.

EDIT: I'm with you, NullValues. First thing I thought of.

Ok, that might not be that bad - if you're going to involve cash anyway, then it makes sense. Of course, this should probably be limited in the number of games it's applied to.

Plus, unlike national economies, there is no real incentive to play nice. Losing users? Increase the frequency of higher value items that can be transferred to other games. You'll get massive inflation.

No, that will just lower the price of these items. Just look at steam market, items that everybody have are not worth much.

I don't like that in or inter games marketplaces. I miss times when I bought game and already got everything without need to find or buy items like in TF2 etc. I know that Valve prefers to sell items rather than release new games, but I prefer the latter.

'Newell said he sees all games essentially becoming "instanced dungeons" of one central economy. "All games should maximize the ability to transfer goods and services," he said. "If Dota2 can't trade with Skyrim, that's a global failure."'

This is kind of like the Euro. Seems like a good idea, but one tanking national economy and everything can get screwed up. Plus, unlike national economies, there is no real incentive to play nice. Losing users? Increase the frequency of higher value items that can be transferred to other games. You'll get massive inflation.

The current system actually works better. To some extent you can transfer wealth from one game to another. First you sell your goods in game 1 for real world cash. Then you use real world cash to buy goods in game 2. This seems awkward, but what it means is that inflation is inherently limited. And a game can't prop up its value with inflation, that will just devalue its goods -- plus the shrinking user base will also reduce the value of those goods. Games still have to compete on what's important, game play.

I'm not sure how the current option helps stave off the inflation you mentioned at all. Currently if my game is losing users I can still prop it up by upping the instances of high value items that users can sell for cash.

The only difference in our two scenarios is that my hypothetical results in a cash balance where yours results in a virtual good. Either way I'm still propping my losing game up by artificially devaluing my own items to drive up user numbers.

I don't totally agree with him on Cloud gaming. He's right as long as games are still developed to fit & run into a traditional PC or console (real or virtual).Today Cloud gaming fails because it uses the same games that run in our PCs/consoles.

But if/once people start making games that are tailor made to run in a datacenter because they use huge assets (terabits of assets) and/or extreme computation / gfx (real time raytracing ) and/or mmo with tons of people at the same virtual location, etc. Then and only then cloud gaming could become something huge.

ofc, there a lot of 'if's here, economical & technical. And it could stay a chicken/egg problem for a long time.

As for "Cloud gaming works until it starts to be successful, when it falls over from its own success" I don't think so either, otherwise it's like saying Youtube (or Hulu) will fall over from its own success (provided I understood correctly that he's talking about network congestion).Both datacenter and ISP technologies know already how to garantee a full HD stream (if not many) to every customer at the same time. Future of TV (and Internet) is unicast streaming to everybody at the same time, not multicast like past/present.Then, streaming a movie or a "real time computed video game image" is the same thing for the "pipes".

I like a lot of Valve's idea's. There's always negative things we can focus on, but I can say when taking in the entire body of work of Valve and Steam, I've been very happy with their direction and progress. They really brought community-based gaming back into the picture, both for their profit and our enjoyment.

This also sounds fun, a virtual bounty board:

"If a player can create a "quest" to go kill his brother in a game 20 times, he should be able to offer money for that in the marketplace."

Really, sounds like a recipe for MAJOR grief. Imagine you piss somebody off playing one game and now you are being hounded in every single game you play by "bounty hunters".

But he and others are salivating at the Jaws thinking of the near Future when no one owns any Art or Games but "Rents & DRM" it and throughout your viewing and gaming experience you also get to see many different In-Art Advertisements.

Damn these people for trying to make money by providing entertainment people enjoy!

I don't like that in or inter games marketplaces. I miss times when I bought game and already got everything without need to find or buy items like in TF2 etc. I know that Valve prefers to sell items rather than release new games, but I prefer the latter.

But there are games (Diablo, Borderlands, etc.) where half (?) the point is finding loot. There might be a way to translate extra in-game currency from say your Diablo character to your Mass Effect character with some sort of built in conversion rate. There's no reason to have it be developer-centric if it were built as part of a overarching system.

The problem would (will) be when this overlaps things that have real world cash value.

One thing that, perhaps, touches on this is what Ubisoft does with uPlay. You get "points" (or whatever they call them) for achievements that can be used to unlock stuff. The nice part (and the only nice part of uPlay) is that you can use those points from one game in another (Ubisoft) game. So, for example, if you don't want the Assassin's Creed 2 wallpaper, you can save those points to unlock something slightly less useless in AC:3 instead.

Edit: After reading further, he definitely read halting state by Charles Stross. I'm pretty sure it had virtual hit contracts and even a virtual bank robbery worth real money, sort of like the EVE robbery.

Living room PCs have been tried before with little success, and it bugs me a little that he doesn't really seem to directly acknowledge that. Controller issues were definitely a big factor, but it also wasn't the only one. In a way, streaming to Blu-ray players, dedicated set top boxes, and even "smart" televisions themselves all emerged from these past failures.

Maybe all it will take this time around is Valve somehow getting the formula just right, but at the moment this sort of talk just seems very pie in the sky to me.

Although I like the idea of opening up the marketplace so that anyone can become makers of content, the great problem becomes one of discoverability. It's great having a million hats to choose from, but I don't want to look at each one to find the one that I want, especially when 99.99% of the hats will be total crap. I'd like to know how Gabe will deal with this issue.

Controls are a big issue, but the interface on the other end is important, too. The biggest issue I have with my plain jane living room PC is seeing my moderately sized 32" TV from 25' feet away to double click the next video file with my mini bluetooth keyboard/mouse. Standard Windows 7 even with the accessibility features doesn't play well at that scale. Ironically, an operating system scaled to a phone or tablet would work better. Windows Media Center was a step in the right direction and I've seen some decent proprietary TV interfaces.

Windows 8 may or may not be useful here -- I think it fails as a basic desktop PC but might have potential in this space with the right controller device. My TV isn't touch screen and I don't want to have to walk all the way over to navigate anyway.

It's a PC. Tweak the theme if things are too small. You are sitting an absurd distance away from a tiny screen. I am not even sure a Tivo would handle your "use case" very well. At least with a PC, you have some hope of having enough control over the appliance to fix it yourself.

I like a lot of Valve's idea's. There's always negative things we can focus on, but I can say when taking in the entire body of work of Valve and Steam, I've been very happy with their direction and progress. They really brought community-based gaming back into the picture, both for their profit and our enjoyment.

This also sounds fun, a virtual bounty board:

"If a player can create a "quest" to go kill his brother in a game 20 times, he should be able to offer money for that in the marketplace."

Really, sounds like a recipe for MAJOR grief. Imagine you piss somebody off playing one game and now you are being hounded in every single game you play by "bounty hunters".

Yeah, that could suck! I'm sure someone would piss of a community like Reddit and they would organize the community to end your online gaming as you know it! Then I'll adjust what I said, if it could be properly regulated to prevent copious amounts of griefing from happening then I'm for it, but that seems unlikely the more I think about it.

But he and others are salivating at the Jaws thinking of the near Future when no one owns any Art or Games but "Rents & DRM" it and throughout your viewing and gaming experience you also get to see many different In-Art Advertisements.

Damn these people for trying to make money by providing entertainment people enjoy!

Damn these people for trying to make Money by providing Entertainment People enjoy!

Exactly. If I ever have to pay more than once for something then that's right: "damn them".

The fact that you are too much of an idiot to object just demonstrates the whole problem with Gabe's vision. He's being too generous with his assessment of the average consumer. They are short sighted, cheap, idiots that will gladly eat dirt and make MS-DOS the dominant platform.

Anything that's not a sub-$100 craptacular streamer will have trouble finding any market. That's why people build living room PCs to begin with. The canned options are crap. Any canned HTPC will be too expensive to gain any market traction.

Controls are a big issue, but the interface on the other end is important, too. The biggest issue I have with my plain jane living room PC is seeing my moderately sized 32" TV from 25' feet away to double click the next video file with my mini bluetooth keyboard/mouse. Standard Windows 7 even with the accessibility features doesn't play well at that scale. Ironically, an operating system scaled to a phone or tablet would work better. Windows Media Center was a step in the right direction and I've seen some decent proprietary TV interfaces.

Windows 8 may or may not be useful here -- I think it fails as a basic desktop PC but might have potential in this space with the right controller device. My TV isn't touch screen and I don't want to have to walk all the way over to navigate anyway.

Win8 may make sense on a TV or not. But MS is expanding its business into online game distribution so MS is now a competitor to Valve. And it will soon be more so since next Xbox will be a Win8 machine. So that MS app store and online xbox games store will merge. If Win8 and Xbox8 is successful steam will dwindle unless valve can come up with something to counter it. It might be a Linux powered steam box. Personally I hope Valve can get Sony to make the HW (they cooperate and make PS4k together). Sony still make good HW. But SW and online services Valve does better I think.

Controls are a big issue, but the interface on the other end is important, too. The biggest issue I have with my plain jane living room PC is seeing my moderately sized 32" TV from 25' feet away to double click the next video file with my mini bluetooth keyboard/mouse. Standard Windows 7 even with the accessibility features doesn't play well at that scale. Ironically, an operating system scaled to a phone or tablet would work better. Windows Media Center was a step in the right direction and I've seen some decent proprietary TV interfaces.

Windows 8 may or may not be useful here -- I think it fails as a basic desktop PC but might have potential in this space with the right controller device. My TV isn't touch screen and I don't want to have to walk all the way over to navigate anyway.

It's a PC. Tweak the theme if things are too small. You are sitting an absurd distance away from a tiny screen. I am not even sure a Tivo would handle your "use case" very well. At least with a PC, you have some hope of having enough control over the appliance to fix it yourself.

Agreed. I believe the recommended viewing distance for a 32" TV is somewhere around 5-8'. A PC luckily gives you the flexibility to tweak interface size, which is more than I can say for virtually any other media device you can hook to your TV.

Although I like the idea of opening up the marketplace so that anyone can become makers of content, the great problem becomes one of discoverability. It's great having a million hats to choose from, but I don't want to look at each one to find the one that I want, especially when 99.99% of the hats will be total crap. I'd like to know how Gabe will deal with this issue.

Gabe wants to make steam a 'game' that is a platform for user generated content. What is the 'content' of a store? Curration. Imagine an Ars store which is just the listing of games powered by steam that are currated by Orland. Valve doing the curration of the store is "pre-internet thinking" according to Gabe. Ars already does a lot of the work. If Valve enables them, it would be a huge boost to Ars with minimal more effort to make their "Opposable Thumbs" page a store too.

Kyle Orland / Kyle is the Senior Gaming Editor at Ars Technica, specializing in video game hardware and software. He has journalism and computer science degrees from University of Maryland. He is based in Pittsburgh, PA.